Simple English definitions for legal terms
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Definition: An investment account that allocates an investor's assets only among mutual funds rather than stocks or other investments.
Example: An investor opens a mutual-fund wrap account with a brokerage firm. The investor selects a portfolio of mutual funds, and the brokerage firm charges a fee based on a percentage of the total assets to be managed. The investor does not select individual stocks or give instructions to buy or sell.
Explanation: A mutual-fund wrap account is a type of investment account that allows an investor to allocate their assets among mutual funds. The investor pays a fee to a brokerage firm, which selects a portfolio of mutual funds based on the investor's risk profile. The investor does not select individual stocks or give instructions to buy or sell. The brokerage firm charges a fee based on a percentage of the total assets to be managed. This type of account is popular among investors who want to diversify their portfolio and have a professional manage their investments.